Cancun climate talks hunt for compromises

CANCUN, Mexico – With just two days left, delegates to the annual U.N. climate conference haggled and cajoled into the night in search of compromise on a raft of issues, including whether industrial nations should generate $100 billion a year, or up to $600 billion, to help poorer countries cope with global warming.

"The progress made is encouraging, but unresolved issues are still many," Zimbabwe's Margaret Mukahanana-Sangarwe, chair of a conference working group, said Wednesday of the half-dozen key disputes. "We need to do better and we need to do more."

This year again the U.N. talks will fail to produce an overarching deal to slash emissions of global warming gases. From the start, the two weeks of talks focused instead on reaching agreement in secondary areas under the U.N. climate treaty.

Setting up a "green fund" for developing nations would top the list of conference accomplishments, and late Wednesday the special climate envoy of host Mexico foresaw success.

"Our expectation is it will be decided at Cancun," said Luis Alfonso de Alba.

Earlier, U.N. Secretary-General Ban Ki-moon, leading a discussion on climate financing, described the fund as "crucial for building trust between the developed and developing world," trust that U.N. officials hope could eventually pave the way to a comprehensive climate deal.

Last year's climate summit in Copenhagen, Denmark, was supposed to have produced that deal — a global pact under which richer nations, and possibly some poorer ones, would be required to rein in carbon dioxide and other greenhouse gases emitted by industry, vehicles and agriculture.

That agreement would have succeeded the 1997 Kyoto Protocol, which mandated modest emissions reductions by developed nations that expire in 2012. Alone in the industrial world, the U.S. rejected Kyoto, complaining that emerging economies, such as China and India, should also have taken on obligations.

The 2009 summit produced instead a "Copenhagen Accord" under which the U.S., China and more than 80 other nations made voluntary pledges to reduce emissions, or at least to limit their growth.

In a sign of the sensitivity of even voluntary pledges, the U.S. and China are squabbling in Cancun over an effort to "anchor" them in a fresh U.N. document. The Chinese want separate listings to maintain a distinction between developing and developed countries, and the Americans want a single integrated list.

The green fund would help developing nations buy advanced clean-energy technology to reduce their own emissions, and to adapt to climate change, by building seawalls against rising seas, for example, and upgrading farming practices to compensate for shifting rain patterns.

Behind closed doors, the Cancun debate zeroed in on the size and sources of the fund.

Developing nations view such finance not as aid but as compensation for the looming damage from two centuries of northern industrial emissions. They consider inadequate the goal set in the Copenhagen Accord for the fund, of $100 billion a year by 2020, and propose instead that richer countries commit 1.5 percent of their annual gross domestic product — today roughly $600 billion a year.

Developed nations have resisted such ambitious targets, and also objected to language indicating most of the fund's money should come from direct government contributions.

In view of the economic crisis, "it is not feasible for most of that money to come through the (government) budgetary process at the moment," Zenawi said in the Ban-led discussion.

Zenawi was a co-chairman of a U.N. high-level panel of international political and financial leaders that studied potential sources for such long-term climate financing.

In its final report last month, the group said the greatest contributions should come from private investment and from "carbon pricing," either a direct tax broadly on emissions tonnage from power plants and other industrial sources or a system of auctioning off emissions allowances that could be traded among industrial emitters.

Either route would make it economical for enterprises to minimize emissions, and would produce revenue. Zenawi said his group recommends that at least 90 percent of such revenues flow to domestic budgets and the remainder to the global fund.

The United States has been a major holdout against such carbon pricing plans, however, and the impending Republican takeover of the U.S. House of Representatives all but guarantees none will be enacted in the U.S. for at least two years.

The U.N. advisers also see possible revenue sources in a tax or trading system for fuel emissions of international airliners and merchant ships, or a fee on air tickets, with a potential for $10 billion a year. They also suggested a possible levy on foreign-exchange transactions, and removal of government subsidies of fossil fuels, with the money redirected to a climate fund. They estimated each of those might also produce $10 billion annually.